Net income attributable to the Company was $30.4 million ($0.94 per
share), compared to $1.1 million ($0.03 per share) in Q2 2017. Q2 2018
Net income attributable to the Company was increased by $1.4 million
($0.04 per share) as a result of adopting ASC 606. Q2 2017 results
included a pre-tax charge of $15.8 million ($0.31 per share after tax)
related to revisions in the estimated profitability of two contracts
in the Albany Engineered Composites segment.

Net income attributable to the Company, excluding adjustments (a
non-GAAP measure), was $0.82 per share, compared to $0.16 per share in
Q2 2017, which included the $0.31 per share charge noted above (see
Table 20).

Adjusted EBITDA (a non-GAAP measure) was $61.9 million, compared to
$30.6 million in Q2 2017, which included the $15.8 million charge
noted above (see Tables 10 and 11).

ROCHESTER, N.H.--(BUSINESS WIRE)--Aug. 6, 2018--
Albany International Corp. (NYSE:AIN) reported that Q2 2018 Net income
attributable to the Company was $30.4 million, including a net benefit
of $4.2 million from income tax adjustments. Net income attributable to
the Company was increased by $1.4 million as a result of adopting ASC
606. Q2 2017 Net income attributable to the Company was $1.1 million,
including a net charge of $0.8 million from income tax adjustments.

Q2 2018 Income before income taxes was $37.3 million, including $2.6
million of restructuring charges and $2.4 million of gains from foreign
currency revaluation. Q2 2017 Income before income taxes was $3.0
million, including restructuring charges of $2.0 million and losses of
$3.5 million from foreign currency revaluation. Q2 2017 Income before
income taxes also included a $15.8 million charge to Cost of goods sold
related to revisions in the estimated profitability of two contracts in
the Albany Engineered Composites segment.

Effective January 1, 2018, the Company adopted the provisions of ASC
606, Revenue from Contracts with Customers, using the modified
retrospective method for transition. Under this transition method,
periods prior to 2018 are not restated. Table 1 summarizes the effect on
various operational metrics that resulted from the adoption of the new
standard:

In Machine Clothing, when excluding the impact of ASC 606 and currency
translation effects, Net sales increased 8.2% compared to Q2 2017. The
increase was principally due to global growth in sales for the packaging
and tissue grades, more than offsetting a continuing but small decline
in publication grade sales.

Second-quarter MC Gross profit as a percentage of sales improved to
48.9% as a result of higher sales and strong capacity utilization. AEC’s
negative gross profit in Q2 2017 was principally due to the $15.8
million charge related to revisions in the estimated profitability of
two contracts, as described above. The additional improvement in AEC
Gross profit as a percentage of sales was driven by higher sales and
improved labor productivity.

Table 5 summarizes selling, technical, general and research (STG&R)
expenses by segment:

Table 5

Three Months ended

Three Months ended

June 30, 2018

June 30, 2017

(in thousands, excluding percentages)

STG&R Expense

Percent of sales

STG&R Expense

Percent of sales

Machine Clothing

$

26,963

16.6

%

$

31,602

21.6

%

Albany Engineered Composites

7,976

8.5

8,998

13.0

Corporate expenses

11,966

-

10,687

-

Total

$

46,905

18.3

%

$

51,287

23.8

%

Gains and losses from the revaluation of nonfunctional-currency assets
and liabilities (primarily arising in the Machine Clothing segment)
decreased total second-quarter STG&R expenses by $2.4 million in 2018,
and increased STG&R expenses by $1.6 million in 2017.

Table 6 summarizes second-quarter expenses associated with internally
funded research and development by segment:

Table 6

Research and development expenses

Three Months ended

June 30,

(in thousands)

2018

2017

Machine Clothing

$

4,211

$

4,525

Albany Engineered Composites

3,183

2,778

Total

$

7,394

$

7,303

Table 7 summarizes second-quarter operating income/(loss) by segment:

Table 7

Operating Income/(loss)

Three Months ended

June 30,

(in thousands)

2018

2017

Machine Clothing

$

50,843

$

38,425

Albany Engineered Composites

4,092

(17,828

)

Corporate expenses

(12,251

)

(10,742

)

Total

$

42,684

$

9,855

Table 8 presents the effect on Operating income from restructuring and
currency revaluation:

Table 8

Expenses/(gain) in Q2 2018

Expenses/(gain) in Q2 2017

resulting from

resulting from

(in thousands)

Restructuring

Revaluation

Restructuring

Revaluation

Machine Clothing

$

1,800

$

(2,331

)

$

805

$

1,650

Albany Engineered Composites

558

116

1,231

(63

)

Corporate expenses

231

(179

)

-

2

Total

$

2,589

(2,394

)

$

2,036

$

1,589

Restructuring charges for Q2 2018 included ongoing costs related to the
closure of the Machine Clothing facility in Sélestat, France. The
Company continues to assess whether property, plant and equipment in
that location will be transferred to other facilities, or if their value
can be recovered through a sale. Depending on the outcome of these
assessments, additional restructuring charges could be recorded in
future periods.

Q2 2018 Other income/expense, net, was expense of $0.7 million. Gains
and losses related to the revaluation of nonfunctional-currency balances
had a negligible impact. Q2 2017 Other income/expense, net, was expense
of $2.6 million, including losses related to the revaluation of
nonfunctional-currency balances of $1.9 million.

The Company’s income tax rate based on income from continuing operations
was 30.1% for Q2 2018, compared to 32.8% for Q2 2017. Discrete tax items
and the effect of a change in the estimated income tax rate decreased
income tax expense by $4.2 million in Q2 2018. Q2 2018 discrete tax
items included a reduction to income tax expense of $5.0 million due to
the reversal of a tax valuation allowance in Europe. Discrete tax items
and the effect of a change in the estimated income tax rate increased
income tax expense by $0.8 million in Q2 2017.

Tables 10 and 11 provide a reconciliation of Operating income and Net
income to EBITDA and Adjusted EBITDA:

Table 10

Three Months ended June 30, 2018

(in thousands)

MachineClothing

AlbanyEngineeredComposites

Corporateexpensesand other

TotalCompany

Operating income/(loss) (GAAP)

$

50,843

$

4,092

$

(12,251

)

$

42,684

Interest, taxes, other income/expense

-

-

(12,378

)

(12,378

)

Net income (GAAP)

50,843

4,092

(24,629

)

30,306

Interest expense, net

-

-

4,621

4,621

Income tax expense

-

-

7,031

7,031

Depreciation and amortization

8,182

10,247

1,244

19,673

EBITDA (non-GAAP)

59,025

14,339

(11,733

)

61,631

Restructuring expenses, net

1,800

558

231

2,589

Foreign currency revaluation (gains)/losses

(2,331

)

116

(188

)

(2,403

)

Pretax loss attributable to non-controlling interest in ASC

-

121

-

121

Adjusted EBITDA (non-GAAP)

$

58,494

$

15,134

$

(11,690

)

$

61,938

Table 11

Three Months ended June 30, 2017

(in thousands)

MachineClothing

AlbanyEngineeredComposites

Corporateexpensesand other

TotalCompany

Operating income/(loss) (GAAP)

$

38,425

$

(17,828

)

$

(10,742

)

$

9,855

Interest, taxes, other income/expense

-

-

(8,622

)

(8,622

)

Net income (GAAP)

38,425

(17,828

)

(19,364

)

1,233

Interest expense, net

-

-

4,285

4,285

Income tax expense

-

-

1,779

1,779

Depreciation and amortization

8,431

8,218

1,184

17,833

EBITDA (non-GAAP)

46,856

(9,610

)

(12,116

)

25,130

Restructuring expenses, net

805

1,231

-

2,036

Foreign currency revaluation (gains)/losses

1,650

(63

)

1,950

3,537

Pretax (income) attributable to non-controlling interest in ASC

-

(144

)

-

(144

)

Adjusted EBITDA (non-GAAP)

$

49,311

$

(8,586

)

$

(10,166

)

$

30,559

Payments for capital expenditures were $23.4 million in Q2 2018,
compared to $21.7 million in Q2 2017. Depreciation and amortization was
$19.7 million in Q2 2018, compared to $17.8 million in Q2 2017.

CFO Comments

CFO and Treasurer John Cozzolino said, “Second-quarter cash flow was
slightly negative as cash generated by the Company’s strong operating
results was utilized to fund the continued growth in AEC. Overall, total
debt increased about $4 million to $525 million as of the end of the
quarter and cash balances increased $3 million to $155 million. The
combined effect of those two changes resulted in a $1 million increase
in net debt (total debt less cash, see Table 22) to a balance of $370
million as of the end of the quarter. The Company’s leverage ratio, as
defined in our revolving credit facility, was 2.23 at the end of Q2, as
compared to 2.55 at the end of Q1, well below our current limit of 3.75.

“Capital expenditures during the quarter were about $23 million, as the
Company continues to invest in equipment to support multiple ramp-ups in
AEC. We continue to expect capital expenditures to range from $20
million to $25 million per quarter through the second half of the year.

“The Company’s income tax rate based on income from continuing
operations was 30.1% in Q2 compared to 32.5% in Q1. The tax rate
declined from Q1 due to a favorable shift in the estimated mix of
pre-tax income in the countries in which the Company does business. Cash
paid for income taxes was about $6 million in Q2 and $14 million through
the first half of the year. We estimate cash taxes for the full year
2018 to range from $22 million to $25 million.”

CEO Comments

CEO Olivier Jarrault commented, “Q2 2018 was a very good quarter for
Albany International with strong performance across both businesses.
Total Company Net sales increased 19%, or 17% excluding the impact of
ASC 606 and currency translation effects. Compared to Q2 2017, which
included a $15.8 million pre-tax charge for revisions in AEC contract
estimates, Net income and Adjusted EBITDA both increased sharply. Net
income increased to $30 million while Adjusted EBITDA grew to $62
million due to higher sales and improved productivity in both MC and AEC.

“MC sales in the second quarter, excluding the impact of ASC 606 and
currency translation effects, increased 8% compared to last year. The
increase was principally due to global growth in sales for the packaging
and tissue grades, more than offsetting a continuing but small decline
in publication grade sales. A substantial amount of the sales growth was
driven by North America, where sales increased across all paper grades.

“MC gross margin was strong during the quarter, rising to 48.9%, a nice
improvement compared to 48.3% in Q2 last year. The increase was
principally due to higher sales and strong capacity utilization.
Operating income and Adjusted EBITDA both increased significantly
compared to Q2 2017, with Adjusted EBITDA improving to $58 million in
the quarter.

“The strong performance in MC over the first half of the year places the
business on track to exceed the high end of our expected full-year
Adjusted EBITDA range of $180 million to $195 million. Assuming no
significant changes in global economic conditions or currency rates, we
currently anticipate Adjusted EBITDA in Q3 and Q4 to be in the range of
$47 million to $51 million per quarter.

“Q2 was another strong quarter for AEC with significant growth in Net
sales, Operating income and Adjusted EBITDA compared to Q2 2017. Net
sales, excluding the impact of ASC 606 and currency translation effects,
increased 36%, while profitability continued to show improvement over
last year.

“The increase in sales was primarily driven by the LEAP program. Sales
of fan cases, fan blades and spacers for LEAP engines, which represented
about 49% of AEC Q2 2018 sales, grew 49% compared to Q2 2017, reflecting
the unprecedented steep ramp up of this jet engine program. Higher sales
of Boeing 787 fuselage frames, as well as F-35 and CH-53K components,
also contributed to the growth in sales.

“AEC operating income improved to $4.1 million in the current quarter,
compared to a loss in Q2 2017 which included the charge for contract
revisions. Adjusted EBITDA also showed good improvement as it increased
to $15.1 million in the quarter, or 16.2% of Net sales, as a result of
volume increases and productivity improvement. Excluding the impact of
the Q2 2017 charge for contract revisions, Q2 2018 Adjusted EBITDA more
than doubled compared to last year.

“In R&D, our new product development activities – which focus on
existing, derivative and new technologies – and our process improvement
projects – which aim to optimize our operational performance across AEC
– continued to progress well during the quarter. Our execution to date
on our major existing contracts, along with anticipated new contract
wins, continue to provide the potential for AEC to reach annual sales of
$475 million to $550 million in 2020. The potential for AEC beyond 2020
will be based not only on executing on the continued ramp up of existing
programs on which we are already well established, but also on
increasing share or acquiring first-time content on ramping programs,
while at the same time winning new contracts on future commercial and
defense airframe and engine platforms.

“The LEAP engine continues to be the preferred choice for single-aisle
aircraft, as evidenced at the Farnborough Air Show where new orders and
commitments in excess of 800 LEAP and CFM56 engines were announced. This
strengthens the already strong LEAP engine order backlog, which
represents several years of production. It has also been reported that
at least one-third of the A320neo-family aircraft in the Airbus backlog
do not yet have engines selected, providing a deep reserve of additional
potential orders.

“We expect AEC to continue to perform well over the second half of the
year. For the full year 2018, we expect the increase in Net sales to end
up closer to the upper end of the 20% to 30% range we discussed last
quarter; and while profitability could fluctuate somewhat over the
second half, full-year Adjusted EBITDA as a percentage of net sales
should show strong incremental improvement compared to 2017. Beyond
2018, we remain on track toward our goal of 18% to 20% Adjusted EBITDA
as a percentage of sales in 2020.

“So in summary, this was a very good quarter for the Company, with
outstanding financial performance in MC and solid sales growth with good
profitability in AEC. With the strong year-to-date results and our
expectation of good performance over the second half of the year, our
financial outlook for both businesses for the full year 2018 is for
improvement compared to 2017, at levels in line with or better than
previously discussed expectations.”

About Albany International Corp.

Albany International is a global advanced textiles and materials
processing company, with two core businesses. Machine Clothing is the
world’s leading producer of custom-designed fabrics and belts essential
to production in the paper, nonwovens, and other process industries.
Albany Engineered Composites is a rapidly growing supplier of highly
engineered composite parts for the aerospace industry. Albany
International is headquartered in Rochester, New Hampshire, operates 22
plants in 10 countries, employs 4,400 people worldwide, and is listed on
the New York Stock Exchange (Symbol AIN). Additional information about
the Company and its products and services can be found at www.albint.com.

This release contains certain non-GAAP metrics, including: net sales,
and percent change in net sales, excluding the impact of ASC 606 and/or
currency translation effects (for each segment and the Company as a
whole); EBITDA and Adjusted EBITDA (for each segment and the Company as
a whole, represented in dollars or as a percentage of net sales); net
debt; and net income per share attributable to the Company, excluding
adjustments. Such items are provided because management believes that,
when reconciled from the GAAP items to which they relate, they provide
additional useful information to investors regarding the Company’s
operational performance.

Presenting sales and increases or decreases in sales, after currency
effects and/or ASC 606 impact are excluded, can give management and
investors insight into underlying sales trends. EBITDA, or net income
with interest, taxes, depreciation, and amortization added back, is a
common indicator of financial performance used, among other things, to
analyze and compare core profitability between companies and industries
because it eliminates effects due to differences in financing, asset
bases and taxes. An understanding of the impact in a particular quarter
of specific restructuring costs, currency revaluation, inventory
write-offs associated with discontinued businesses, or other gains and
losses, on net income (absolute as well as on a per-share basis),
operating income or EBITDA can give management and investors additional
insight into core financial performance, especially when compared to
quarters in which such items had a greater or lesser effect, or no
effect. Restructuring expenses in the MC segment, while frequent in
recent years, are reflective of significant reductions in manufacturing
capacity and associated headcount in response to shifting markets, and
not of the profitability of the business going forward as restructured.
Net debt is, in the opinion of the Company, helpful to investors wishing
to understand what the Company’s debt position would be if all available
cash were applied to pay down indebtedness. EBITDA, Adjusted EBITDA and
net income per share attributable to the Company, excluding adjustments,
are performance measures that relate to the Company’s continuing
operations.

Net sales, or percent changes in net sales, excluding currency rate
effects, are calculated by converting amounts reported in local
currencies into U.S. dollars at the exchange rate of a prior period. The
impact of ASC 606 is determined by calculating what GAAP net sales would
have been under the prior ASC 605 standard, and comparing that amount to
the amount reported under the new ASC 606 standard.These amounts
are then compared to the U.S. dollar amount as reported in the current
period. The Company calculates EBITDA by removing the following from Net
income: Interest expense net, Income tax expense, Depreciation and
amortization. Adjusted EBITDA is calculated by: adding to EBITDA costs
associated with restructuring, and inventory write-offs associated with
discontinued businesses; adding (or subtracting) revaluation losses (or
gains); subtracting (or adding) gains (or losses) from the sale of
buildings or investments; subtracting insurance recovery gains in excess
of previously recorded losses; and subtracting (or adding) Income (or
loss) attributable to the non-controlling interest in Albany Safran
Composites (ASC). Adjusted EBITDA may also be presented as a percentage
of net sales by dividing it by net sales. Net income per share
attributable to the Company, excluding adjustments, is calculated by
adding to (or subtracting from) net income attributable to the Company
per share, on an after-tax basis: restructuring charges; inventory
write-offs associated with discontinued businesses; discrete tax charges
(or gains) and the effect of changes in the income tax rate; foreign
currency revaluation losses (or gains); acquisition expenses; and losses
(or gains) from the sale of investments.

EBITDA, Adjusted EBITDA, and net income per share attributable to the
Company, excluding adjustments, as defined by the Company, may not be
similar to similarly named measures of other companies. Such measures
are not considered measurements under GAAP, and should be considered in
addition to, but not as substitutes for, the information contained in
the Company’s statements of income.

The Company discloses certain income and expense items on a per-share
basis. The Company believes that such disclosures provide important
insight into underlying quarterly earnings and are financial performance
metrics commonly used by investors. The Company calculates the quarterly
per-share amount for items included in continuing operations by using
the income tax rate based on income from continuing operationsand
the weighted-average number of shares outstanding for each period.
Year-to-date earnings per-share effects are determined by adding the
amounts calculated at each reporting period.

*Due to the uncertainty of these items, management is currently
unable to project restructuring expenses and foreign currency
revaluation gains/losses for 2018.

This press release may contain statements, estimates, or projections
that constitute “forward-looking statements” as defined under U.S.
federal securities laws. Generally, the words “believe,” “expect,”
“intend,” “estimate,” “anticipate,” “project,” “will,” “should,” “look
for,” and similar expressions identify forward-looking statements, which
generally are not historical in nature. Forward-looking statements are
subject to certain risks and uncertainties (including, without
limitation, those set forth in the Company’s most recent Annual Report
on Form 10-K or Quarterly Report on Form 10-Q) that could cause actual
results to differmaterially from the Company’s historical
experience and our present expectations or projections.

Forward-looking statements in this release or in the webcast include,
without limitation, statements about macroeconomic and paper-industry
trends and conditions during 2018 and in future years; expectations in
2018 and in future periods of sales, EBITDA, Adjusted EBITDA (both in
dollars and as a percentage of net sales), income, gross profit, gross
margin, cash flows and other financial items in each of the Company’s
businesses, and for the Company as a whole; the timing and impact of
production and development programs in the Company’s AEC business
segment and the sales growth potential of key AEC programs, as well as
AEC as a whole; the amount and timing of capital expenditures, future
tax rates and cash paid for taxes, depreciation and amortization; future
debt and net debt levels and debt covenant ratios; the impact of the new
revenue recognition standard on financial results for each business
segment and for the Company as a whole; the impact of the U.S. tax
legislation passed in Q4 2017; the timing and impact of the
restructuring in France; and changes in currency rates and their impact
on future revaluation gains and losses. Furthermore, a change in any one
or more of the foregoing factors could have a material effect on the
Company’s financial results in any period. Such statements are based on
current expectations, and the Company undertakes no obligation to
publicly update or revise any forward-looking statements.

Statements expressing management’s assessments of the growth
potential of its businesses, or referring to earlier assessments of such
potential, are not intended as forecasts of actual future growth, and
should not be relied on as such. While management believes such
assessments to have a reasonable basis, such assessments are, by their
nature, inherently uncertain. This release and earlier releases set
forth a number of assumptions regarding these assessments, including
historical results, independent forecasts regarding the markets in which
these businesses operate, and the timing and magnitude of orders for our
customers’ products.

Historical growth rates are no guarantee of future growth, and such
independent forecasts and assumptions could prove materially incorrect
in some cases.